Employer mandate and reporting delayed until 2015

The key employer responsibility under health care reform is to provide employees with health insurance or pay a penalty —a requirement dubbed “pay or play” or the “employer mandate.” This mandate — which applies to businesses with 50 or more full-time employees or their equivalent — has been delayed a year, until 2015.

The Obama administration announced the change on July 2. Not only is the mandate postponed, the requirement that employers report details about their health insurance plans to the IRS and employees has also been delayed until 2015. However, in the IRS blog where this delay was originally announced, Mark Mazur, assistant Treasury secretary for tax policy, wrote that the IRS will “strongly encourage employers to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015.”1

With the mandate delayed, employers will incur no penalties under the Patient Protection and Affordable Care Act (PPACA) in 2014. For more information on the penalties associated with deciding to "pay" instead of "play," check out our pay or play podcast or our latest health care report, particularly the section titled "'Pay or play' — an employer’s biggest decision." Keep watch for more information and official guidance concerning this change.

This is not the only PPACA delay the administration has announced this year. Others include:

Impact on employees

With the employer mandate delay, some employers who do not currently offer health insurance may decide to delay adding coverage until 2015. This means some employees may not gain access on January 1, 2014 to employer-provided health coverage as previously expected.

Impact on employers

This delay will allow employers additional time to understand the technical components of the employer responsibility provision. They will have more time to determine whether they meet the definition of a “large employer” and whether their existing medical plans and benefit eligibility practices are in compliance with the law. The delay also affords employers an opportunity to think about their broader benefit strategy — so they can determine what’s best for their workforce and business.